KARACHI: The government has raised over Rs708.4billion through the Treasury Bills (T-bills) auction on Wednesday against an auction target of Rs700bn.

According to the State Bank of Pakistan (SBP), bids for six-month T-bills were Rs1.647tr but the government remained close to its target of Rs700bn.

The SBP raised 3-month T-Bills worth Rs238.624bn at 7.3763 per cent, while it raised 6-month benchmark T-Bill worth Rs 334.689bn at 7.6463 per cent. The bids for 12-month papers were rejected.

The cut-off yields on three-month papers were slightly changed, not reflecting any major change in the coming weeks. However, the central bank reduced the cut-off yield by 11 basis points for the benchmark six-month T-Bills.

The primary dealers offered an amount of Rs1.026tr for six-month papers, Rs536.272bn for three-month and Rs84.340bn for 12-month papers. The cut-off yield on three-month papers was reduced by seven basis points to 7.40 per cent. The cut-off yield on six-month paper was also reduced to 7.6871 per cent from 7.7998 per cent.

The government also raised Rs118.326bn face value as non-competitive bids making the total amount raised through T-bills as Rs708.4bn, against the target of Rs700bn.

According to the market analysts, the government is raising money from the domestic market discouraging domestic investors for the long term investment in Pakistan Investment Bonds (PIBs) despite higher returns of up to 10.9 per cent for 10-year bond.

The first quarterly report of the SBP revealed that debt servicing for the entire 2019-20 was Rs2,387bn. The steep rise in interest payments consumed over 73 per cent of the Federal Board of Revenue (FBR) taxes constituted nearly 53.8 per cent of total federal expenditures.

However, the central bank raised an amount of Rs8.463bn from 2-year Pakistan Investment Bonds (PIB) while it had rejected bids for three-years paper.

The PIB auction did not see the interest of the domestic investors as the total bids offered were Rs16.5bn. The government raised only Rs8.4bn for two-year papers while bids offered for three-year papers were rejected. Total bids accepted including non-competitive bids were Rs12.093bn.

The analyst said that investors of the PIBs are expecting a change in the interest rate in a few months. This is against the inflow of foreign investment in the PIBs. During 2020-21, PIBs attracted about $240m foreign investment, indicating that foreign interest has been revived in domestic bonds.


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